Common Types Of "Qualified" Retirement Plans

A 401(k) plan is an employer-sponsored retirement plan that allows you to save money for retirement while deferring income taxes on the savings until the time of withdrawal. Investments typically consist of mutual funds focusing on stocks (including, perhaps, your company’s stock), bonds, and money market funds or stable value investments.

It is called a “qualified” plan because a 401(k) account is subject to the rules specified by the IRS. These rules include limitations on annual contributions, penalties for distributions before retirement age, and other rules that may affect your ability to access or transfer funds.

An Individual Retirement Account (IRA) also allows you to save money for retirement in tax advantaged way. Like 401(k) accounts, IRAs are subject to rules specified by the IRS.

An IRA is similar to a 401(k), but an IRA can be set up without the help of an employer.

A 403(b) plan is a tax-advantaged retirement savings plan available for public education organizations, some non-profit employers, and self-employed ministers in the United States.

A 403(b) plan is similar to a 401(k), but is only available to certain organizations.

Depending on your circumstances, you may be able to take the money from your existing retirement account and transfer it into a different vehicle without suffering immediate tax consequences.

Annuities funded with an IRA or 401(k) rollover are “qualified” plans, enabling an insurance company to create an “IRA annuity,” into which you can deposit your retirement funds directly. Additionally, you can have your employer roll over your 401(k) funds into an annuity without withholding any taxes since no mandatory withholding requirements pertain to funds directly transferred into an annuity by an employer.

Many individuals have their retirement plan funds tied to mutual funds, stocks, and bonds. This means that these retirement account values are subject to market risk.

Rolling your qualified plan into an Annuity gives you a continued tax shelter, while permitting you a huge range of index options, guarantee of principle options, and living and death benefits that can protect you and/or your family whether the stock and bond markets go up or down.

Please note: The information provided here is for informational purposes only and is a summary of our understanding of the current tax laws and regulations as they relate to insurance, annuities, and qualified plans. The information provided is not intended to be used for purposes of avoiding penalties imposed under the United States Internal Revenue Code. You should consult with your own attorney, accountant, or tax adviser for legal, tax, or accounting advice. The material on this website is intended for informational purposes only and is not intended to, nor should it be, construed as an offer or solicitation for the purchase or sale of any specific insurance products, annuities, financial services, or other non-specified items.